Stan Druckenmiller is Leaving
09/28/2010 0 comments
Bill Gross wrote on PIMCO's monthly investment outlook:
- The New Normal has a new set of rules. What once pumped asset prices and favored the production of paper, as opposed to things, is now in retrograde.
- The hard cold reality from Stan Druckenmiller’s “old normal” is that prosperity and overconsumption was driven by asset inflation that in turn was leverage and interest rate correlated.
- Investors are faced with 2.5% yielding bonds and stocks staring straight into new normal real growth rates of 2% or less. There is no 8% there for pension funds. There are no stocks for the long run at 12% returns.
So in this long and dreadful 'new normal' environment as Gross and El-Erian coined it, a de-leveraging process will make a buy and hold investment strategy have a 'new normal' sub-par return. However, a tactical asset allocation, albeit in a shorter time span, will be able to spot out some of the opportunities, as evidenced by MyPlanIQ's Tactical Asset Allocation strategy (YTD return of a moderate TAA model portfolio for the six core asset ETF plan is around 4%, for example). "new normal' requires a paradigm shift of the old investing strategy, let alone a disciplinary process.
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